A Sound Investment
The decision to target a particular vertical market isn’t simple. Some have likened it to making a financial investment—if the timing is right, your efforts could reap significant benefits. On the other hand, if the market of choice is regulated or easily influenced by outside sources, your losses could be substantial.
Because a single technology or product line doesn’t necessarily measure success in the supply-chain market, you might be wondering if it’s better to be everything to everyone. Broadening your focus across multiple markets might not pay off as big upfront, but it could be a safer investment in the end.
So, what’s a distributor to do? Research is a good place to start. To help you along in the decision-making process, Print+Promo reached out to proven experts in three major vertical markets.
Here, they discuss trending products, the selling process and hot-button issues.
1. HEALTH CARE
The medical vertical requires nurturing and patience. Clients belonging to this sector are methodical and only truly make a committed decision when a certain level of trust has been developed within the relationship—especially in matters pertaining to health care. Perhaps no one is more familiar with this than ComplyRight Distribution Services (CDS), a provider of government-compliant products and services with manufacturing locations in California and Pennsylvania, and distribution points in Minnesota and Florida. Composed of TFP Data Systems and Apex Business Systems, CDS maintains relationships with numerous government agencies, such as the National Uniform Claim Committee, the Centers for Medicare and Medicaid Services, and the American Hospital Association, to ensure full compliance of product lines ranging from tax forms and software to health insurance claim forms.
According to Jim Magdaleno, product manager for CDS, health care is the leading industry for buyers of ComplyRight products and solutions. “This industry is accustomed to dealing with government regulations, making them extra sensitive to compliance issues,” he noted. “We began serving the health care vertical by supplying medical billing forms, like the CMS-1500, through our dealers. That product offering has been incredibly successful.”
And it doesn’t stop there. More recently, CDS has expanded its product offering to include industry-specific labor law posters and subscription service, safety solutions (e.g., bloodborne pathogens training and postings), Health Insurance Portability and Accountability Act products and HR record-keeping tools. “A great example of [HR record-keeping tools] is our new health care-specific job application that asks pertinent questions about certifications, licensing and preferred shifts,” Magdaleno said.
The Issues
In late December, the IRS announced it was extending the 2016 due dates for Affordable Care Act (ACA) information reporting. While the deadlines have changed, the requirements remain the same and covered businesses still are obligated to file. Specifically, businesses have until March 31 to supply employees with the 2015 Form 1095-B and Form 1095-C; May 31 to file forms 1095-B and 1095-C with the IRS if submitting paper forms; and June 30 to submit 1095-B and 1095-C to the IRS if filing electronically. “Many of our partners already have achieved significant ACA sales,” Magdaleno shared. “And since the IRS has extended the due dates for ACA reporting, there’s still time for new distributors to get on board and secure 2016 sales.”
To help dealers capitalize on this new revenue stream, CDS offers a full line of ACA products and services, including paper forms and envelopes, and proprietary software. “Our ACA software from ComplyRight is an all-in-one solution to help businesses comply with the new regulations,” Magdaleno said. “This software provides all the tools needed to create and print forms 1095-B, 1095-C, 1094-B and 1094-C, as well as e-file the form data with the IRS. The software has been a top seller for our partners.”
Magdaleno acknowledged that there continues to be “considerable confusion” surrounding ACA filing, which is why CDS created white papers that distributors can use as an additional selling tool. “We have white papers that our distributor partners can provide to their customers to help alleviate confusion and capture the sale.”
The Selling Process
When a market presents so many untapped selling opportunities, extra competition is bound to follow. Magdaleno suggested leading in with a bestselling—and mandatory—form, like the CMS-1500. Be prepared to ask prospects if they are satisfied with their current suppliers of CMS-1500 forms. If the answer is “no,” find out if their forms are compliant or if they have ever been rejected. From there, distributors can introduce other compliant products. “[For example, ask if they] know we provide health care-specific state and federal labor law postings for the medical office,” Magdaleno said.
He also urged distributors to look beyond doctors’ offices. Try targeting hospitals, urgent care clinics, nursing facilities, home health care providers, chiropractors, physical therapists, mental health professionals and dentists. Magdaleno recalled a recent order that stood out to him involving a health care processing company that had converted to high-speed Océ print technology. During processing, Magdaleno said, the company’s CMS-1500 claim forms were printing with burning marks—a cause for rejection. The reseller turned to CDS for a solution. “We explained that our forms would work for them,” Magdaleno said. “However, we insisted they try samples before committing to a large purchase. We provided samples of our forms, which are printed with soy-based ink and go through a comprehensive drying process to withstand high speed and heat.” CDS’ remedy paid off. Not only did the reseller save the job, it secured a monthly order of 200,000 forms.
2. NONPROFIT
There are many misconceptions surrounding the nonprofit sector, with “nonprofit” translating to “no money” at the top of the list. But the numbers tell a different story. According to the 60th anniversary edition of Giving USA’s annual report, released June 2015, Americans gave an estimated $358.38 billion to charity in 2014, up from 2013’s $339.94 billion, and officially surpassing the peak last seen before the Great Recession.
The nonprofit sector also has a significant impact on U.S. society and the economy. As highlighted in the 2014 Nonprofit Sector in Brief report by the Urban Institute’s Center on Nonprofits and Philanthropy, the tax-exempt sector in the U.S. represented 5.4 percent of the country’s gross domestic product (GDP) during 2012, contributing $887.3 billion to the economy. “And of those tax-exempt entities, 501(c)(3) public charities accounted for slightly more than three-quarters of the sector’s revenue ($1.65 trillion) and expenses ($1.56 trillion) and more than three-fifths of nonprofit assets ($2.99 trillion) during 2012,” wrote authors Brice S. McKeever and Sarah L. Pettijohn. “Comprised of approximately 1.44 million nonprofits registered with the Internal Revenue Service (IRS) in 2012, the sector has grown approximately 8.6 percent since 2002.”
But there’s more. Only approximately 35 percent of nonprofits registered with the IRS in 2012 were required to file a Form 990, Form 990-EZ or Form 990-PF with the IRS. McKeever and Pettijohn pointed out that reporting nonprofits stated “2.16 trillion in revenues and $4.84 trillion in assets.”
Perhaps Roger Buck, CDC, marketing director of St. Louis-based Flesh Co, put it best: “To me, that suggests not only do they have money, it’s a growth market.”
Nonprofit groups rely on a wide array of printed products to drive their donation and fundraising efforts (think membership cards, parking permits, address labels and direct mail). “Nonprofit groups can be very good customers, assuming you’re either in their area or are willing to travel there,” Buck remarked. “Nationally known nonprofits could have local chapters. Distributors may want to test the water first, then determine if targeting nonprofits as a vertical makes profitable sense for their company. At that time, they may want to create a nonprofit sales arm to continue the focus and momentum.”
Flesh Co offers sample kits specific to nonprofits as a way to help distributors understand the different print opportunities. For a more educational approach, distributors are encouraged to take advantage of the company’s blog and online training tools, like webinars. “Distributors wishing [for] more in-depth discussion can [also] request an onsite lunch-and-learn session with one of our sales managers,” Buck added.
The Issues
Buck said that while distributors can expect to see some changes in the nonprofit sector this year, Flesh Co anticipates “more of the same.” He explained that there are generally two primary components to a nonprofit campaign: the donation request and the donor thank you. “The request may utilize pre-addressed address labels as a gift to the donor to drive response rates,” he mentioned. “Integrated cards are a large part of the market as most groups reply to a donation with some printed form of ‘supporting member’ identification.
“It may be for the support to a zoo, theater or college alumni,” Buck continued. “This would follow the donor request stage and can also include other items, such as parking decals, hang tags or other supporter identification.”
The Selling Process
When asked how the selling process differs for the nonprofit sector compared to other major verticals, Buck stressed the importance of understanding the client’s goals. The distributor should also understand that some of the goals may have related pain points. “Campaign control costs, increasing response rate and raising donations are all critical areas for a nonprofit,” Buck said. “Understanding where the group is today and where it wants to be needs to be in the first conversation.”
This means asking thoughtful questions. Find out about the prospect’s past efforts. Did it work for the organization—why or why not? “It’s not unlike dealing with any sales-driven (donor, in this case) organization,” Buck said. “The client will be keen to costs of campaign, lead (donor) generation, response rate and lifetime customer (donor) value.”
While there may be trade show opportunities that call for booth graphics and promotional items, mailings are the norm. This is where distributors can impress with their design skills in order to help nonprofits deliver effective messaging to the right audience. Buck explained that distributors can assist in segmenting the current donor base into demographics, including gender, age and household income. Those findings can then be applied to any prospecting database acquired on behalf of the nonprofit. Distributors can use this same information to tailor the request message, graphics and donor request amount to ensure the most relevant request reaches the most appropriate targets, Buck said.
He offered an example. “If the nonprofit’s past donor records showed women donate more than men, and especially women with children, then any mailing directed at a female should have images of kids and a higher donation request,” Buck insisted. “This request may show amounts of $25, $50 or $100, while a donation-request letter sent to a single male might show $15, $25 or $50, as the records showed men donate less. The database analytics, list acquisition, message and graphic development are all areas where distributors can charge for the value they are bringing to the table.”
Distributors also can help nonprofits control print costs by offering integrated cards and labels. “Many groups issue thick plastic cards to members and, when you think about it, most of the cards may rarely get presented and are replaced annually,” Buck said. “So, these are ideal applications for integrated card designs.”
3. FINANCIAL
It’s no secret that financial institutions have had to work extra hard to repair their tainted public personas from recessionary fallout. With budget heads giving the green light for extra spending, organizations have been returning to tried-and-true promotional items, like pens and squeeze balls, as a way to increase customer loyalty and gain extra exposure. “Fewer and fewer entities in this marketplace means spending needs to be sharper and more focused than ever before,” remarked Bill Mahre, president of ADG Promotional Products, Hugo, Minn. “It doesn’t have to be large-dollar items or the latest and greatest thing, but it does have to enhance their branding position and message.”
ADG Promotional Products offers a variety of financial market staples—from writing instruments and planners to travel mugs and key chains. In addition, the company website is home to actual distributor presentations for the financial sector, along with other key verticals for the curious reseller.
The Issues
Professionals in the financial sector may be more sensitive to an item’s return on investment, but they also understand that solid marketing efforts come with a handsome reward. Huntington Bank is a perfect example. In November, Promo Marketing, the sister publication of Print+Promo, reported on the success of the Columbus, Ohio-based bank’s 2010 rebranding campaign. Hoping to create a “welcoming” image, the bank’s strategy involved unchaining and giving away its pens. As a result of that decision, Huntington Bank estimated that it has given away nearly 32 million Huntington Bank pens to date. Mary Navarro, Huntington Bank’s senior executive vice president and retail and business banking director, even has spotted the bank’s green and black pens as far as Spain and Costa Rica.
From a demand standpoint, Mahre said that blue ink stylus pens will continue to enjoy success in 2016. “Blue ink [is] needed for financial document signings and [these are] easy marketing tools that are very cost-effective,” he noted. “The ability to personalize items also is very important since financial institutions don’t just want generic items, but the opportunity to target down to a specific person or company.”
The Selling Process
There are certain things distributors should know before calling upon financial prospects. Mahre said that even the largest institutions have significant marketing budgets on a local and/or regional basis. “Mostly due to differing laws and regulations by state, many of the decisions are made by local people trying to integrate themselves in each respective community,” he mentioned. “... The key is still to find the major decision-makers and ask questions as to what is important, what message is critical to be positioned with their client base and what type of events are they supporting in the community.”
Also, be prepared to answer questions. According to Mahre, these professionals want to know more than the item’s cost; they expect distributors to communicate the entire project’s cost. “Their financial acumen allows them to understand that having a low-priced item might not be ideal if shipping, rush charges, set-up fees and other miscellaneous costs add significantly to the bottom line,” Mahre said.
Finally, help them solve problems. Mahre cited inconsistent branding as a common challenge. Distributors can use this as an opportunity to shine. “We have seen a number of financial institutions that use similar brand layouts and messages on writing instruments, planners, calendars, etc.,” he said. “Simple, but very cost-effective when you constantly deliver the same look from a brand and message standpoint.”